By Katie Shonk
Business negotiators understand the importance of reaching a win-win negotiation: when both sides are satisfied with their agreement, the odds of a long-lasting and successful business partnership are much higher. But concrete strategies for generating a win-win negotiation contract often seem elusive. The following five, from experts at the Programme on Negotiation at Harvard Law School, will help set you and your counterpart up for a deal that is truly win-win.
Win-win negotiation strategy #1: Make multiple offers simultaneously.
When you put only one offer on the table at a time, you will learn very little if the other party turns it down. By contrast, think about what happens when you simultaneously present multiple offers, each of which is equally valuable to you, advises Harvard Business School Professor Max H. Bazerman. If the other side refuses all of your offers, ask which one he/she likes best. The preference for a specific offer should give you a strong clue about where you might find value-creating, win-win trades and generate mutual gain. In addition to identifying potential win-win moves, when you make multiple offers simultaneously, you signal your accommodating and flexible nature, as well as your desire to understand the other party’s preferences and needs. So, the next time you are about to make an offer, advises Bazerman, consider making sure that you value equally instead.
Win-win negotiation strategy #2: Include a matching right.
In negotiation, including a matching right in your contract—a guarantee that one side can match any offer that the other side later receives—can be a classic win-win move, according to Harvard Business School and Harvard Law School Professor Guhan Subramanian. Imagine that you’re a landlord negotiating with a prospective tenant. You want to keep the ability to sell the apartment to someone else in the future, while the prospective tenant wants a commitment to rent the apartment for as long as she wants. Offering the tenant a matching right—the power to match any legitimate third-party offer—would allow you to preserve your own flexibility while giving the tenant the opportunity to avoid the disruption of a move. In this manner, matching rights can improve the odds of a win-win agreement.
Win-win negotiation strategy #3: Try a contingent agreement.
In negotiation, parties often reach impasse because they have different beliefs about the likelihood of future events. You might be convinced that your firm will deliver a project on time and under budget, for example, but the client may view your proposal as unrealistic. In such situations, a contingent agreement—negotiated “if, then” promises aimed at reducing risk about future uncertainty—offers a way for parties to agree to disagree while still moving forward, writes Massachusetts Institute of Technology Professor Lawrence Susskind in his book Good for You, Great for Me: Finding the Trading Zone and Winning at Win-Win Negotiation (Public Affairs, 2014). Contingent commitments often create incentives for compliance or penalties for noncompliance, explains Susskind. You might propose paying specified penalties for turning your project in late or agree to significantly lower your rates if you go over budget, for example. To add a contingent agreement to your contract, begin by having both sides write out their own scenarios of how they expect the future to unfold. Then negotiate expectations and requirements that seem appropriate to each scenario. Finally, include both the scenarios and the negotiated repercussions and rewards in your contract. A contingent agreement can greatly increase your odds of being satisfied with whatever remedies are in place—and help generate a win-win deal.
Win-win negotiation strategy #4: Negotiate damages upfront.
Because not all future events can be anticipated with contingent agreements, another way to foster a win-win agreement is to include liquidated damages clauses in your contract that stipulate how much will be paid if the contract is breached, according to Subramanian. Consider that if one party sues the other side for breach of contract down the line, the plaintiff (if she wins) will be awarded monetary damages rather than the specific goods or services that were lost. Therefore, negotiating upfront exactly how much will be paid for each late or missed delivery, for example, may streamline any alternative dispute-resolution measures or lawsuits that arise. In addition, negotiating damages puts a new issue on the table—and thus expands the potential for value creation. In this manner, adding new issues to the mix increases the opportunity for win-win negotiations.
Win-win negotiation strategy #5: Search for post-settlement settlements.
Imagine that you’ve just reached an agreement. You are fairly happy with the deal, but suspect you could have eked more value out of it. According to conventional wisdom, you should quit talking about the agreement with your counterpart and move on, lest you spoil the deal. By contrast, Bazerman advises asking the other party whether he would be willing to take another look at the agreement to see if it can be made better. Explain to your counterpart that you would each be free to reject a revised deal if it doesn’t improve both of your outcomes. This type of post-settlement settlement can lead to new sources of value to divide between you. It can also help generate a win-win contract if you didn’t have one before. Your su ccess in hammering out your initial agreement may have established the trust needed to explore the possibility of an even stronger deal.